Continental Europe Top 10 Lead in Brand Value Growth

Driven by the region’s economic recovery, the value of the Top 10 most valuable brands based in Continental Europe increased 19 percent overall, more than any other region, following a rise of only 5 percent a year ago.

All of the Continental Europe Top 10 brands rose in value. Those brands included two of the fastest risers in the BrandZ™ Top 100 Most Valuable Global Brands 2014, Sweden’s IKEA, which grew 61 percent in brand value, and Movistar, the Spanish telecom, up 56 percent.

In contrast, the overall value of the Top 10 brands based in North America rose only 5.9 percent and the UK Top 10 only 5.4 percent. That’s because, despite resurging economies, some brands faltered and their brand value declines held back the level of overall brand value appreciation.

The reverse phenomenon occurred in Asia, where the outstanding growth of two Chinese technology brands offset the brand value declines of several banks impacted by the slowdown in China’s rate of economic growth. Tencent, the social network and Internet portal, almost doubled in brand value, while the brand value of the portal and search engine Baidu increased 46 percent.

The overall value of brands in Latin America continued to decline following a decrease of 13 percent a year ago. Unlike in Asia, there were not many rising brands to offset the steep declines experienced by two Brazilian leaders, Petrobras, the oil and gas brand, and the personal care brand Natura. In summary:

North America

America continues to be home for the world’s most valuable brands.

The Top 10 brands in the BrandZ™ Top 100 Most Valuable Global Brands 2014 are also the Top 10 most valuable North American brands. The match confirms that the US continues to be home for the world’s most valuable brands. Last year only nine of the Top 10 brands were American. In 2014, Amazon rose to number 10 in the BrandZ™ Global 100, replacing China Mobile, which slipped a few slots.

It’s even possible to locate the geographic center of high brand value more precisely as not simply the US, but the technology centers of West Coast. Google and Apple, the number one and two brands, are based in Northern California. The Seattle suburbs are home to Microsoft and Amazon, the fourth and tenth ranked brands. These four brands together account for $461.2 billion in brand value, about 16 percent of the BrandZ™ Global Top 100 total brand value.

Beyond technology, changes in brand value reveal a more nuanced view about US-based brands and how brand strength enabled some brands to withstand the vicissitudes of their categories. Coke rose only 3 percent in brand value, mostly because of health issues surrounding soft drinks. McDonald’s declined 5 percent in part because menu complication slowed service. AT&T appreciated only 3 percent because of competitive pressures and price disruption.

Continental Europe and the UK

Local economic resurgence and demand from fast growing markets drove brand value appreciation, particularly on the Continent.

Movistar, the mobile brand of Spainbased Telefónica, successfully launched an offering that bundled Internet with broadband and fixed-line service. Deutsche Telekom reported strong financial results with strength in Germany, its home base, and a revival in the US. The company aimed to become the pan European telecom leader.

The telecoms also were among the highest value brands in the UK. Well funded with cash from selling its stake in America’s Verizon Wireless, Vodafone agreed to purchase Spain’s Ono. The transaction, along with the earlier acquisition of a German cable operator strengthened Vodafone’s position in high-speed broadband. BT purchased the rights to English Premier Football, adding over two million new subscribers and driving revenue.

IKEA, with around 300 home furnishings stores worldwide, benefited from the resurging developed economies and demand in fast growing markets. Increased consumer confidence drove sales for Louis Vuitton and Hermès and the brands worked to reinforce their exclusivity.

The streamlining that followed the financial crisis enhanced profits of global bank brands. The banks still contended with public distrust, however. Like the other oil and gas majors, Shell and BP focused more on finding efficiencies and cost savings.

Asia and Latam

Individual brands improved in value, primarily in Asia, offsetting other brand value declines. Latam lacked this balance.

Tencent acquired strategic stakes in the search business Sogou and, China’s second largest ecommerce mall. The brand also introduced mobile payment and financial services that competed directly with banks. Baidu expanded in gaming and location-based purchasing.

China’s slower growth impacted the banking business, which experienced less loan origination for infrastructure investment and also a higher rate of loan payment problems. The Australian banks benefitted from their proximity to fast growing Asian markets and from the economic strength of their home market.

The strengthening of the Japanese economy and the rebound of the US car market helped Toyota. Korea’s Samsung continued to demonstrate leadership in mobile devices and other consumer electronics.

In Latin America, brand values declined because of economic weakness. Mexico’s Corona beer brand grew 21 percent in brand value with the purchase of its parent company Modelo by the global brewer AB InBev.

Fewer Fast Growing Market Brands

Brands from fast growing markets declined from 17 to 14 in the BrandZ™ Top 100 Most Valuable Global Brands 2014, with 11 Chinese brands included. No brands from Latin America are present in the Global Top 100 this year, although several appear in the category rankings.

Chinese Internet brands focus on growing mobile payments

During the Chinese New Year, one of China’s leading Internet brands enabled people to purchase and exchange online the red packets of money that Chinese traditionally exchange face-to-face for holiday gift giving.

Tencent, an Internet portal and social network, a mix of Facebook, Twitter and a blogging site, offered the program on its mobile messaging service WeChat. Users deposited money into their WeChat accounts and supplied the contact details of gift recipients. In the process, Tencent enriched its online banking business with more money and customers.

In addition, Tencent and one of its rivals, Alibaba, the giant ecommerce site, similar to Amazon and eBay, competed with mobile apps for taxi ride payments. Offering incentives to riders and drivers, the brands attempted to build their mobile payment businesses. Determined to compete in mobile payments, Baidu, the other brand in the Chinese Internet triumvirate, a search engine similar to Google, acquired an app store, 91 Wireless, during 2013.

Tencent, Alibaba and Baidu, also have created online wealth management products that offer higher yields than banks and have quickly diverted billions of dollars from traditional savings accounts. Tencent was the fastest riser in the BrandZ™ Top 100 Most Valuable Global Brands 2014, almost doubling in value. Baidu increased in brand value 46 percent. Alibaba, which is 24 percent owned by Yahoo!, is preparing an IPO (Initial Public Offering). Yahoo! brand value increased 44 percent.

The initiatives of these brands illustrate the power of technology brands in China, and their ability to grow rapidly, innovate and leapfrog the West in emerging trends like mobile payments and online banking. Their success challenges China’s banking category to respond with competitive products. And it tests the government’s ability to balance its goal of opening markets with the need to support the banking industry and its SOEs (State Owned Enterprises).

It’s not yet certain that online products can maintain their rapid growth rate amid fluctuations in China’s economy and steps taken by regulators and traditional banks to limit online payments. The outcome potentially affects not only the technology brands, but also the availability of capital to millions of small entrepreneurs. The leaders of China’s next wave of economic development, these entrepreneurs are less likely to bank with SOEs, whose businesses focus more on funding large infrastructure projects and other government needs.

BrandZ Top 100 2014

BrandZ Global 2014 Report Top 100 Report

Top 100 Chart

Top 100 Infographic

Methodology and valuation by Kantar Millward Brown

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